At 30 you may have your first mortgage, have started a family, and be well on your journey towards financial wellbeing. However, if you’ve hit 30 and suddenly think you’re over the hill, rest assured when it comes to building financial wealth, time is still on your side. Take the time to review these questions to see if you’re on the right track.
This article originally appeared in the "Slice Of Life".
Am I Financially Literate?
‘I speak to people every day about money,’ says Tony. ‘Even people who are successful in other parts of their lives, often don’t have the first clue when it comes to their money. There was a global financial literacy test conducted recently that asked the most basic questions, and two-thirds of people failed it.’ You can try a modified version of the test here to see where you stand on financial literacy. ‘Time is what allows you to achieve financial goals,’ says Tony. ‘If you don’t start getting your act together now, your 65-year-old self will be cranky with you.’
How Much Debt Do I have?
It’s likely by the time you are 30 you would have accumulated some debt, whether it’s a student loan debt, a car debt or a credit card debt. ‘At some point, they want their money back,’ says Tony, ‘so you need to do it in the most cost efficient manner possible.’ The MoneySmart website (link here) has a whole section on how to manage your debts, and it includes a calculator to help you work out exactly what your debts are and how much you owe in total. Now is the time to consolidate your debts and get them paid off as best you can.
Is It Time To Buy A House?
‘I think the first thing people need to do [when they’re thinking about buying a house] is not ask, “What’s the maximum I can borrow?”. Instead they need to ask, “What can I reasonably afford?”, says Tony. ‘You then do the calculations with the current interest rate, but you also do the calculations at an interest rate of 6 or 7 percent and work out whether you can still afford to buy then.’
Have I Started A Family Or Do I Plan To Soon?
In Australia, early thirties is the most common age for new mothers, so it’s likely you’ve started a family or plan to soon. ‘Kids, they’re an expensive business, I can tell you,’ says Tony. ‘The first thing is to understand your money. If you don’t know how much you are spending, you don’t have control of your situation. Then, you need to work out how to survive on one income for a period. You need to get your head around how the Paid Parental Leave scheme works and how long that will fund you.’
Now, with dependents, it’s also time ‘to get serious about your health insurance and life insurance’, says Tony. Consumer advocacy group Choice has created a quiz (link here) you can do to see if you need health insurance. Life insurance is more important now because you have people dependent on you and your income. You want to be sure they are protected if something happens to you.
Do I Have An Emergency Fund?
“You have to expect the unexpected with kids,” says Tony. “And you’ll need an emergency fund in place.’ MoneySmart offers useful tips on how to set up an emergency fund for life’s inevitable unexpected expenses.
Tony also recommends income protection. Income protection is often included in super, but Tony says: ‘Don’t assume that is enough. That’s a mistake. Almost certainly it won’t be. If you’re in your thirties and have kids, it’s a really important issue. You need to ask a couple of basic questions: how much do I need and what’s a good premium to cover it.’
Am I Keeping An Eye On My Super Fund?
‘You can ask people some simple questions about their super and often they don’t know the most basic things,’ says Tony. Now is the time to educate yourself. If you’re an employee, know what fund you’re in. Understand where your money is going: does your fund include life insurance, income protection, perhaps even total permanent disability insurance ? How much? Do you need to top up with extra insurance? It’s more than likely, Tony advises. If you’re self-employed are you a member of a super fund? It’s highly recommended that you are. MoneySmart’s Retirement planner (link here) can help you work out whether your super is on track. It’s a fabulous guide to indicating just how much super you should be putting away.
Subscribe to our regular updates sharing our best ideas on wealth management and personal development. Just enter your email for tips and resources to get your financial house in order and positively impacting your life today.